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EXHIBIT 10.6
SECTION 3 AGREEMENT
THIS SECTION 3 AGREEMENT is made as of March 18, 1998 by and among
Xxxxxx X. Xxxxxxx, Special Trustee of the Tennent Family Trust dated as of
November 20, 1989 (the "Shareholder"), Coyote Sports, Inc., a Nevada
corporation ("Coyote"), and Paragon Coyote Texas Ltd., a Texas limited
partnership ("Paragon").
RECITALS
WHEREAS, pursuant to that certain Stock Purchase Agreement dated as of
February 3, 1998 by and among, inter alia, the Shareholder, Coyote and Unifiber
Corporation, a California corporation ("Unifiber") of which the Shareholder is
the sole shareholder (the "Unifiber Acquisition Agreement"), Coyote has agreed
to buy all of the issued and outstanding capital stock of Unifiber from the
Shareholder subject to the terms and conditions set forth therein and in the
other documents contemplated thereby (the "Unifiber Acquisition"); and
WHEREAS, Paragon is lending Coyote the funds to enable Coyote to
consummate the Unifiber Acquisition (the "Paragon Financing"); and
WHEREAS, as a condition to its willingness to provide the Paragon
Financing, Paragon is requiring that Coyote irrevocably and unconditionally
assign all of its right, title and interest in and to Coyote's rights (the
"Rights") under Section 3 of the Shareholder Agreement attached as Exhibit 2.1
to the Unifiber Acquisition Agreement ("Section 3") effective upon the closing
of the Unifiber Acquisition (the "Assignment"); and
WHEREAS, Paragon and the Shareholder wish, among other things, to
memorialize the Shareholder's consent to the Assignment and to clarify the
application of Section 3 to Paragon following the Assignment; and
WHEREAS, the Paragon Financing will tangibly and directly benefit the
Shareholder.
NOW, THEREFORE, in consideration of the premises and of other good and
valuable consideration, the receipt and sufficiency of which the parties hereby
acknowledge, the Shareholder, Paragon and Coyote hereby agree as follows:
1. The Shareholder consents to the Assignment in accordance with
its terms.
2. The Shareholder agrees that no approval of Coyote's Board of
Directors pursuant to Section 3(a)(2) of the Shareholder Agreement shall be
required upon Paragon's purchase, if any, of the Shares (as such term is
defined in the Shareholder Agreement) upon exercise of the Rights subsequent to
the Assignment.
3. Each of the Shareholder and Coyote agrees that the Shareholder
Agreement shall be duly executed and delivered at the closing of the Unifiber
Acquisition without any change or
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modification, and that no terms or conditions of the Unifiber Acquisition shall
be changed or modified in such a way as to impair the value of the Rights in
the hands of Paragon. In the event of any conflict between the terms and
conditions of this Agreement and those of the Shareholder Agreement, the terms
and conditions of this Agreement shall control. Other than as expressly
provided in this Agreement, the terms and conditions of the Shareholder
Agreement shall remain unchanged.
4. Notices required under Section 3 shall be in writing and be
delivered or mailed by certified or registered mail, postage prepaid, as
follows, or to such other address as the Shareholder or Paragon, as the case
may be, shall furnish in writing to the other in the manner set forth herein:
If to Shareholder:
Xxxxxxx X. Xxxxxxx
Xxxx X. Xxxxxxx
0000 Xxxxxxxxx Xxxxx, Xxxx Xx. 0
Xxxxxxx Xxxxxxx, Xxxxxx 00000
With a copy to:
F. Xxxxxxx Xxxx, Esq.
Harrigan, Ruff, Sbardellati & Xxxxx, APC
000 Xxxx Xxxxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
If to Paragon:
Xxxx Xxxxxx, President
Paragon Management Group, Inc.
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
With a copy to:
Xxxxx X. Xxxxxx, Esq.
Xxxxxxxx & Xxxxxx L.L.P.
000 Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000
5. This Agreement may be executed in one or more counterparts,
each of which shall be an original and all of which taken together shall
constitute one and the same instrument. Signatures exchanged by facsimile
shall be deemed to constitute original, manually-executed signatures and shall
be fully binding.
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6. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado (other than laws that pertain
to conflict of laws).
IN WITNESS WHEREOF, the parties have entered into this Section 3
Agreement as of the date first above written.
/s/ Xxxxxx X. Xxxxxxx, Special Trustee
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Xxxxxx X. Xxxxxxx, Special Trustee of the
Tennent Family Trust dated as of
November 20, 1989
COYOTE SPORTS, INC.,
a Nevada corporation
By: /s/ Xxx X. Xxxxxxxxxxx
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Name: Xxx X. Xxxxxxxxxxx
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Title: Chief Executive Officer
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PARAGON COYOTE TEXAS LTD.,
a Texas limited partnership
By: Paragon Management Group, Inc.,
a Texas corporation, General Partner
By: /s/ Xxxx X. Xxxxxx
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Xxxx Xxxxxx, President
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